Tuesday, 22 January 2019

There
are few loans that have the specific purpose at an end user level. A
home loan is taken for buying a house, a car loan or an auto loan for
buying a vehicle, education loan for studies, business loan for
business purpose. But loans like personal loan or loan against
property, do not have a specific purpose for the end user. They may
use the amount received from a loan into any of the use they wish to.
When we talk about loan against property, it is a type of loan which
is a secured loan and could be taken by keeping a property as
security to the lender.

The only difference between personal
loans and Loan against property is that personal loan is a type
of unsecured loan and LAP (Loan Against Property) is a type of
secured loan. So what is the basic difference between secured and
unsecured loan? As the name states, a secured loan is the one where
the borrower will keep some security against the amount borrowed and
in an unsecured loan, there are no such things kept against the
amount that is taken. Also, it is easier to get a secured loan as in
case of default the lender can compensate the money by selling off
the security which is kept. However, one can not just get that by
mere keeping the security and let us now look at the factors that
impact the eligibility.

1.
Credit score

A credit score as we all know is a three-digit number ranging from
300-900 where 300 is considered the lowest and 900 is highest. Made
from five parameters, it shows that how responsible one is when it
comes to credits they have taken. May it be any loan, secured,
unsecured, Credit score is always checked while approving the loan as
it is one of the major factors for any lender to check the
creditworthiness of the borrower. When in such a case if the score is
low, one may try for a personal
loan for low cibil score in order to get an instant loan.

2.
Documents of the property

While applying for LAP, the documents of the property are studied
carefully.

• The property should be on the borrower’s name. Only then can
the loan be approved.

• If the property is on forefather’s name, there must be proper
power of atony which gives all the rights to the borrower to take any
decision on that.

• The property should have no legal issues. That is if there is any
dispute over the property, then, in that case, the loan is not
sanctioned.

3.
Source of income

If suppose, the property that is kept as the security in LAP against
the money borrowed has the monthly repayment cycle of say 25,000 and
the borrower has the income of 30,000 or maybe even less then in that
case the loan is not sanctioned. The reason is, the borrower should
be easily able to make the repayment of the loan taken after
deducting the usual expenses he/she may have from their salary or the
amount they earn.

4.
Loan tenure

Strange fact, but even loan tenure of the loan applied for also plays
an important role in getting loan sanctioned. If the loan is applied
for more then 10 years in usual cases, it becomes difficult to get it
approved. However, the purpose of applying a loan is also checked in
such cases.

5.
Employment status

Many times, an individual is not steady at one particular job. Do
they keep on switching because of whatever reason and that gives a
sense of instability to the lender as would they be consistent enough
in repaying the loan amount?

6.
Insurance on property

The insurance taken over the property also plays an important role.
If in case something happens to the property, then in such cases the
valuation may go down. But if the insurance is taken, then it could
be recovered.

7.
Age

Age is always a factor while applying for any loan. May it be a
personal loan or home loan or car loan of loan against property. The
average lifespan of any individual person is checked against the
number of years they may work and the continuing source of income.
Then the loan tenure is checked and approved it all are in sync.

Except
for the above mentioned seven eligibility criteria, rejection of
previous loans, bad credit history, type of land are few other
criteria that are checked while the borrower is applying for LAP. One
has to understand that just because this is a secured loan does not
mean it will be approved in minutes. Ans always, when the credit
history is weak or the score is low, one must try and apply for a
personal loan for low cibil score.

Saturday, 19 January 2019

Jobs
always give a financial security and that’s the most required these
days. Unlike ancient time where things worked with the barter system,
today it is the money that is exchanged in terms of goods and
services. It takes a lot find a decent job where one can adjust
themselves, work and get settled. Sometimes this journey is very
comfortable and sometimes it is full of a roller coaster. Not
everything ever is as perfect as one wants it to be and hence working
in the same organization for forever is not very common and in some
cases not even advisable.

Many
people change their jobs after a certain period of time depending on
their individual needs. However, changing jobs too frequently also
has its repercussion and effects. One may have to change a job for
better perspective, good salary hike, newness or to get better
comfort than in current organization. But, changing them too
frequently also gives an idea about instability. When talking about
loans and credits, before the approval of the loan, the employment
status is always checked. The earning obviously is checked in both
the cases if a borrower is a salaried individual or a self-employed
individual as that is the indication of how much loan amount is to be
sanctioned in order for the borrower to pay that loan easily.

There
are few loans that are approved only when an employee is working in
the current organization for more than one and a half or two years.
The frequent change gives the loan approvers an idea that that must
be a pattern that one follows. What if the job where they are working
currently would not be a longer duration one, and he/she may switch
and will not be able to pay the EMIs on time? It becomes a risky
decision for the lender. Also, the cibil
score
will get affected if the borrower is unable to pay the EMIs of the
loans and credit card bills on time. This would lead the score to go
down and the report gets affected.

There
are a few examples where an individual has genuine reasons for the
switch of their jobs. But, they can’t be as fast as changing it
every six-eight months or each year for a very long period of time.
Once in a few years and some in a couple of years would not be very
bad as it may happen that an employee is not very comfortable in the
process and hence planning to change. But yes, if that is in all the
jobs, then it gave an impression about the person not being stable
and responsible enough to adjust.

Cibil
score calculation
may not directly has these criteria that a changing job directly
affects it. But when one applies for a loan, the background is
checked by the underwriters. Underwriters are the people who check
the eligibility of the borrower or the applicant who has applied for
a loan. For a few loans where the loan amount is higher, a reference
check is done. To the people staying in the neighborhood, the HR of
the organization where the individual works and sometimes maybe in a
previous organization if the applicant has recently switched a job.
In any of the cases, the inquiry definitely goes to the employer and
if one frequently changes the job then, in that case, it gives a
negative impact. With the reference check, the underwriters also take
a personal discussion with the applicant to understand a few aspects
when they can see frequent job changes or bad
cibil
score.

With
all this, the bottom line is that one must be bey sure of the
decisions they take. Today may not be a day where they want to apply
for a loan, but tomorrow there can be a possibility that they have
to. If not taken care today, it may affect it tomorrow!